BP’s just released 2010 Annual Report to shareholders is proforma, with the exception of a detailed section titled “Gulf of Mexico Spill.” (p.34; you can read the full report here.)
No bonuses for the top Executives this year, but rewards for “good business results.” Something to think about the next time you fill up your tank!
Below are some selected highlights from the 2010 Annual Report:
BP’s estimates of the impact of the Gulf of Mexico oil spill:
Compensation of top Executives: (p. 112) (my emphasis)
While the tragedy of lost lives and environmental damage remains foremost in everyone’s minds, the committee also wished to fairly acknowledge the good business results in many parts of BP, delivered in the most testing of times. Mr Conn and Dr Grote met or exceeded their specific segment/functional targets for the year and were awarded 30% of their overall ‘on-target’ bonuses, including the deferred element. This reflected no payout on the portion related to group results (as with all executive directors) and was limited to ‘on-target’ for the portion related to their strong segment/functional results. A third of their bonus is deferred into shares on a mandatory basis, matched, and will vest in three years subject to meeting a safety and environmental hurdle during the period. Both individuals may elect to defer an additional third into shares on the same basis as the mandatory deferral. Both will receive salary increases in 2011 as noted in the table opposite.
Good business results, indeed. Consider this:
Acquisitions and disposals
In 2010, BP acquired a major portfolio of deepwater exploration acreage and prospects in the US Gulf of Mexico and an additional interest in the BP-operated Azeri-Chirag-Gunashli (ACG) developments in the Caspian Sea, Azerbaijan for $2.9 billion, as part of a $7-billion transaction with Devon Energy. For further information on this transaction, including required government approvals, see Exploration and Production on page 43. As part of the response to the Gulf of Mexico oil spill, the group plans to deliver up to $30 billion of disposal proceeds by the end of 2011. Total disposal proceeds during 2010 were $17 billion, which included $7 billion from the sale of US Permian Basin, Western Canadian gas assets, and Western Desert exploration concessions in Egypt to Apache Corporation (and an existing partner that exercised pre-emption rights), and $6.2 billion of deposits received in advance of disposal transactions expected to complete in 2011. Of these deposits received, $3.5 billion is for the sale of our interest in Pan American Energy to Bridas Corporation, $1 billion for the sale of our upstream interests in Venezuela and Vietnam to TNK-BP, and $1.3 billion for the sale of our oil and gas exploration, production and transportation business in Colombia to a consortium of Ecopetrol and Talisman, the latter completing in January 2011. See Financial statements – Note 4 on page 163.
What about research in alternative fuels? From p. 28: (my emphasis)
Climate change and carbon pricing – climate change and carbon pricing policies could result in higher costs and reduction in future revenue and strategic growth opportunities.Compliance with changes in laws, regulations and obligations relating to climate change could result in substantial capital expenditure, taxes, reduced profitability from changes in operating costs, and revenue generation and strategic growth opportunities being impacted. Our commitment to the transition to a lower-carbon economy may create expectations for our activities, and the level of participation in alternative energies carries reputational, economic and technology risks.
Ever the optimist, there is hope for support of research to protect the environment…scientists take note, and by all means, consider applying for funding!
p. 36 (my emphasis)
Restoration, research and other donations
In conjunction with the Gulf of Mexico Alliance (a partnership of the states of Alabama, Florida, Louisiana, Mississippi and Texas with the goal of significantly increasing regional collaboration to enhance the ecological and economic health of the Gulf of Mexico), we have established the Gulf of Mexico Research Initiative (GRI) providing $500 million to study and monitor the spill’s potential long-term impacts on the environment and local public health. Specifically, the 10-year programme will examine the spread and fate of the oil and other contaminants, the degree of biodegradation, effects of the spill on local ecosystems, and detection, clean-up and mitigation technology. While the details of the programme were being developed, BP awarded a series of fast-track grants to five research groups, totalling $40 million. BP and the Gulf of Mexico Alliance appointed an equal number of research scientists to the governing board of the GRI and, in December, the GRI held its first meeting.